Timbercreek MIC on Decline

Timbercreek Mortgage Investment Corp's steady steel wheels have run off the rails, with the price of TMC falling by over 12% in the last year.  Typically it has seen no price action and has had very low beta.  The whip came down in June, pushing the MIC's yield to a sweet as brown sugar 8%.  This is despite the steady 6.3 cent payout per month (equivalent to 0.68% this past September).

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Another MIC ready for a comeback!
In an interview with canadianmortgagetrends.com, Andrew Jones, Managing Director, Debt Investments at Timbercreek Asset Management, was asked about the impact of rising interest rates.  Jones noted that MICs have built-in protection as the loans are typically of short duration (e.g., Timbercreek average duration remaining is between 18-24 months).  The high portfolio turnover means about half of  loans could be repaid each year. So the MIC is able to pursue new loans at higher interest rates in a short time if rates rise.  Also loans can include floor rates based on prime so that the MIC benefits from an increase in prime but is protected by a minimum 'floor' interest rate. That should gimme shelter from the shattered price drop of late.

Timbercreek announced it has received shareholder approval for the Corporation's transition from the Canadian securities regulatory regime for investment funds to the regulatory regime for non-investment fund reporting issuers.  Pricing will hopefully correct after the transition.

It has been noted that while a public company is more expensive to operate than a fund, Timbercreek says shareholders will benefit because the funds will no longer pay trailer fees to investment advisers who sell their units.